BAE inks £2.5 billion contract for 20 aircrafts

BAE Systems PLC agreed a deal to supply 20 aircrafts to Oman.

BAE Systems PLC agreed a deal to supply 20 aircrafts to Oman.

On the 21st of December, BAE Systems PLC informed that it has agreed a deal to supply 20 aircrafts to Oman. A deal worth £2.5 billion, or over $4 billion, is expected to protect thousands of jobs in the United Kingdom.

BAE – Oman deal

The contract includes delivery of 20 aircrafts -12 Typhoon and 8 Hawks. The significance of the deal was underlined by BAE Systems PLC as the company expressed its confidence that the contract would support its expansion strategy in international markets and export business as well.

According to a statement, production of ordered aircrafts is said to start in 2014. Furthermore, the company also highlighted growing interest in the Typhoon and Hawk aircraft.

BAE Systems PLC is satisfied with the deal with Oman as it means that the cooperation between those two parties is successful, according to Guy Griffiths who is group managing director for BAE Systems’ International business. In addition, the company is strongly convinced that Oman made an excellent choice by deciding to acquire 12 Typhoons and 8 Hawks which are said to be the most advanced aircrafts in the world.

However markets were more pessimistic about the contract. After the announcement, BAE Systems PLC saw its shares drop approximately 2 percent.

The deal means that Oman becomes the seventh operator in the world, and the second one in the region of the Middle East, of the Typhoon. To date, the United Kingdom, Germany, Italy, Spain, Austria and Saudi Arabia have been in possession of the BAE Systems PLC’s aircrafts.

BAE in limbo

Just on the 19th of December, BEA informed that the £4.5 billion  contract to supply Saudi Arabia with as many as 72 Typhoon fighters was delayed as some disagreements over the final price occurred. Therefore the company was forced to warn that it would reduce full-year underlying earnings-per-share if the deal was not reached by the 21st of February 2013.

But not only problems revolving around the contract with Saudi Arabia are beleaguering BAE Systems PLC as the company needs to find its place after the plan of the merger with EADS collapsed.  The merger with EADS had been awaited by the company as cuts in defense spending have triggered the more competitive conditions in the market. The merger was aimed at minimizing any effect of budgets cuts in military spending. Therefore the company is under pressure to develop a different expansion strategy. Analysts note that the company is now looking for ways to win contracts in other markets such as the Middle East. It seems that its new strategy is bearing fruits as the company informed that the United Arab Emirates was interested in ordering as many as 60 Typhoons.

However the deal to supply Oman with its aircrafts is expected to secure as many as 6,000 high technology and engineering jobs.  It is worth underlining that not only jobs at the BAE Systems PLC will be safeguarded but also posts in other companies which form the so-called supply chain.

Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

Recent Posts

Visa takes over Swedish fintech Tink in €1.8bn deal

Visa takes over Swedish fintech Tink in €1.8bn deal

: Visa is committed to perform better in the field of open banking sector by combining its networks and Tink’s modern technologies.
3 hours ago
BP Invests $7 million in Electric Vehicle Charging Technologies

BP Invests $7 million in Electric Vehicle Charging Technologies

Investment in IoTecha is linked with BP’s intention to produce over 70,000 public EV charging points globally by 2030
4 hours ago
Elon Musk’s Starlink satellite internet set to cover the globe soon

Elon Musk’s Starlink satellite internet set to cover the globe soon

Starlink, the satellite internet unit of Elon Musk’s SpaceX, will most likely be able to provide global coverage by September, according to the company’s president Gwynne S
1 day ago
At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

Krispy Kreme, the popular donut chain, aims raise roughly $4 billion as it makes one of the biggest IPO debuts at the NYSE.
1 day ago
Panasonic hopes Blue Yonder acquisition will improve its software woes

Panasonic hopes Blue Yonder acquisition will improve its software woes

Most Japanese major companies, which at one time were leaders in consumer electronics, are struggling to find their feet in a world that has moved to digital software. Electronics
2 days ago
Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

The Ikea and Rockefeller foundations are jointly launching a $10 billion fund to promote small-scale renewable power projects in developing nations. Both
3 days ago